Prieska Project A Giant in Waiting Developing a 21 st century South - - PowerPoint PPT Presentation

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ASX/JSE: ORN ASX/JSE: ORN

Prieska Project – A Giant in Waiting

Developing a 21st century South African zinc-copper mine

Investor Presentation June 2019

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DISCLAIMER

This presentation contains summary information about Orion Minerals Ltd and its subsidiaries (Orion or Company) and their activities and is current as at 31 May 2019. The information in this presentation is a general background and does not purport to be complete or provide all information that an investor should consider when making an investment decision. No representation or warranty, express or implied, is provided in relation to the accuracy

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completeness

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the information. Statements in this presentation are made only as of the date of this presentation unless otherwise stated and the information in this presentation remains subject to change without notice. The Company is not responsible for updating, nor undertakes to update, this presentation. It should be read in conjunction with the Company’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at www.asx.com.au and the Johannesburg Stock Exchange (JSE), which are available at www.jse.co.za. Certain statements contained in this presentation, including information as to the future financial or operating performance of Orion and its projects, are forward-looking statements. Such forward-looking statements:

• are necessarily based upon a number of estimates and

assumptions that, while considered reasonable by Orion Minerals Ltd, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies;

• involve known and unknown risks and uncertainties that

could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements; and

• may include, among other things, statements regarding

targets, estimates and assumptions in respect of metal production and prices, operating costs and results, capital expenditures, mineral reserves and mineral resources and anticipated grades and recovery rates, and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and

• ther

conditions. Orion disclaims any intent or obligation to update publicly any forward-looking statements whether as a result of new information, future events or results or otherwise. The words ‘believe’, ‘expect’, ‘anticipate’, ‘indicate’, ‘contemplate’, ‘target’, ‘plan’, ‘intends’, ‘continue’, ‘budget’, ‘estimate’, ‘may’, ‘will’, ‘schedule’ and similar expressions identify forward looking statements. All forward-looking statements made in this presentation are qualified by the foregoing cautionary statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and accordingly investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein. All information in respect of Exploration Results and other technical information should be read in conjunction with the relevant ASX announcements released by the Company. Orion is not aware of any new information or data that materially affects the information for the Mineral Resource and confirms that all material assumptions and technical parameters underpinning the estimates in the relevant Orion ASX releases (as referenced in the presentation) continue to apply and have not materially changed. Orion confirms that the form and context in which the Competent Person’s findings are presented have not materially changed. To the maximum extent permitted by law, Orion and any of its related bodies corporate and affiliates and their officers, employees, agents, associates and advisers:

• disclaim any obligations or undertaking to release any

updates or revisions to the information to reflect any change in expectations or assumptions;

• do not make any representation or warranty, express or

implied, as to the accuracy, reliability or completeness of the information in this presentation,

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likelihood

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fulfilment of any forward looking statement or any event or results expressed

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implied in any forward-looking statement; and

• disclaim all responsibility and liability for these forward

looking statements (including, without limitation, liability for negligence). Nothing contained in this presentation constitutes investment, legal, tax or other advice. The information does not take into account the investment objectives, financial situation or particular needs of any

• recipient. Before making an investment decision, each recipient of this

presentation should make its own assessment and take independent professional advice in relation to the information and any action taken

• n the basis of this presentation.

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ORION MINERALS: KEY INVESTMENT HIGHLIGHTS

• Globally significant VMS Resource: 30.49 Mt at 3.7% Zn,

1.2% Cu 1

• Initial 10-year, 2.4Mtpa operation targeting 70-80ktpa Zn,

20-24ktpa Cu 2

• Scoping Study supports globally competitive costs,

strong margins and financials

• Bankable Feasibility Study due Q2 2019
• Final Investment Decision H2 2019
• Landmark Black Economic Empowerment agreement

completed

• Access to Australian and South African capital markets
• Exceptional exploration and growth pipeline

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South African Office: Johannesburg, Gauteng Prieska Project Northern Cape

South Africa Australia

Fraser Range Project Western Australia Australia head office Melbourne, Victoria

1 Refer ASX release 15 January 2019 2 Refer ASX release 19 December 2018

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CORPORATE STRUCTURE

1. Fully paid ordinary Orion shares (Shares) on issue as at 31 May’19. 2. Completion of Tranche 2 of the $8M capital raising, being the issue of 83.71M Shares at 4.0cps (together with one free attaching option for every two Shares issued) (subject to shareholder approval at a General Meeting to be held 7 June 2019 (Meeting)) (refer ASX release 16 Apr’19). 3. Cash on hand as at 31 Mar ‘19. 4. Founding BEE investor exchange for Shares (subject to shareholder approval at the Meeting) (refer ASX release 16 Apr’19). 5. Refer to ASX release 4 Mar’19 and the Company’s Half Year Accounts for period ended 31 Dec’18 for information related to the Preference Shares Agreement (ZAR15.75M) that Repli Trading No 27 (Pty) Ltd (a 73.33%

• wned subsidiary of Agama Exploration & Mining (Pty) Ltd) (Repli) has entered into with Anglo American sefa Mining Fund (AASMF). On 4 Mar’19 Orion announced that it had reached agreement with AASMF for AASMF to

voluntarily redeem the Preference Shares for Orion Shares (subject to Orion shareholder approval at the Meeting). Balance shown as at 31 Mar’19. 6. Refer to the Company’s Half Year Accounts for period ended 31 Dec’18 for information related to the Loan Agreement (ZAR14.25M) that Repli has entered into with AASMF. Balance shown as at 31 Mar’19. 7. Refer to ASX release 25 Jan’19 and the Company’s Half Year Accounts for period ended 31 Dec’18 for information related to the Convertible Notes. 8. Orion announced on 25 Jan’19 that it had entered into a $3.6M loan facility with Tembo Capital (excluding capitalised interest and fees) (Loan Facility). Under the terms of the Loan Facility, Tembo may at its election have the balance of the Loan Facility settled by the issue of Shares at a deemed issue price of 2.6cps (subject to receipt of shareholder approval). Refer to ASX release 25 Jan’19 and the Company’s Half Year Accounts for the period ended 31 Dec’18 for additional information. Balance shown as at 31 Mar’19. 9. Calculated based on closing price of ORN Shares on the ASX on 31 May‘19. Closing price of ORN Shares on the JSE on 31 May‘19 was ZAR0.33.

• 10. Alexander Haller is deemed to have a relevant interest in securities held by Silja Investment.

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Capital structure summary

Current Post Capital Raising Shares on issue1 2,003M 2,003M Options on issue2 208M 250M Cash on hand3 $1.1M Placement of Shares – Jun‘19 (Tranche 2)2 - ($3.3M) 84M Founding BEE investor share exchange4 - ($4.2M) 135M AASMF preference shares redeemed5 - ($2.4M) 78M AASMF loan6 $1.6M Convertible notes (2.6cps convert, 12% coupon, Sep‘19 maturity) 7 $5.8M Convertible loan (2.6cps convert, 12% interest, Jan‘20 term) 8 $3.8M Total Shares (post Share issues) 2,300M Market capitalisation (3.0cps (ASX))9 $60M $69M

Significant shareholders Current % Post capital raising %

Tembo Capital 24.0 20.9 Independence Group NL 7.7 6.7 Tarney Holdings 5.6 4.9 Wyllie Group 5.5 4.8 Silja Investment & Alexander Haller10 3.5 3.0 Total 46.2 40.2 Primary listing on the ASX. Secondary listing on Main Board of the Johannesburg Stock Exchange.

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PRIESKA: REAWAKENING A GLOBAL VMS GIANT

• World-class orebody – recorded as a Top 30

global VMS deposit

• Located in Northern Cape Province, 270km

south-west of regional capital, Kimberley

• Established mining region, yet least populous region
• f South Africa
• Historically mined by AngloVaal (1971-1991)
• Recorded historical production of 1Mt of Zn and

430kt of Cu from 46.8Mt of sulphide ore milled*

• Extensive infrastructure in place
• Near-mine exploration and further expansion

potential

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* Source: Mine records

Gamsberg/ Black Mountain Skorpion/ Rosh Pinah

Prieska Project area

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PRIESKA: DEVELOPING A NEW MINE IN THE FOOTPRINT OF AN OLD ONE

Extensive infrastructure already in place:

• Primary shafts and underground decline roadways
• Sealed access roads to project site
• 48km via bitumen road to existing rail siding
• Four high-voltage regional lines linked to national

electricity grid

• 175MW operational solar power plants in area with

additional 675MW approved and 300MW pending authorisation

• 800km rail link to major bulk commodity and deep-

water ports

• Bulk water pipeline supplies to site
• Good contractor accommodation facilities ~3km from

site

• Low environmental sensitivity – existing mine footprint

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PRIESKA: MINERAL RESOURCE

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Focusing on the development of the Deep Sulphide Resource, comprising 28.73Mt @ 3.8% Zn and 1.2% Cu

Resource Classification Tonnes Zn Zn Cu Cu tonnes % tonnes % Deep Sulphide Resource Indicated 18,507,000 667,000 3.6 217,000 1.17 Inferred 10,219,000 417,000 4.1 117,000 1.1 +105m Level Resource Indicated 623,500 19,000 3.05 10,000 1.54 Inferred 1,138,000 16,000 1.4 17,000 1.4 Total Indicated 19,131,000 686,000 3.59 227,000 1.18 Total Inferred 11,357,000 433,000 3.8 134,000 1.2 Grand Total 30,488,000 1,119,000 3.7 361,000 1.2

Refer ASX release 15 January 2019

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PRIESKA: STRONG OPERATING MARGINS

• 4,000
• 2,000

2,000 4,000 6,000 8,000 10,000

• 2,000
• 1,600
• 1,200
• 800
• 400

400 800 1,200 1,600 2,000 2,400 Cumulative Cash Flow (ZARm) Net Real Cash Flow (ZARm)

Net & Cumulative Cash Flows

Net Cash Flow After Tax Cumulative Cash Flow

Scoping Study outlined a robust initial 10-year mining scenario (based on the extraction of the Deep Sulphide Resource with processing through a new 2.4Mtpa on-site concentrator producing ~70-80ktpa of zinc and 20-24ktpa

• f copper in concentrates)

Refer ASX release 19 December 2018

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PRIESKA: NEXT STEPS

• Bankable Feasibility Study (BFS) due end of Q2 2019
• Final Investment Decision targeted in H2 2019
• Commencement of construction in late 2019/early 2020
• Orion progressing key commercial work streams:

✓ Permitting ✓ Concentrate marketing ✓ Project financing

• Resource extension drilling to commence following establishment of

underground drilling platforms – targeting strike extensions and up- folded limb of the main Prieska VMS lens, which remains open

✓ Well-understood world class ore body – one of the world’s top 30 volcanogenic massive sulphide deposits ✓ IRR of 38% and payback period of less than 3 years ✓ Positive cash flow from FY 2023

IN BRIEF

✓ Initial 10-year, 2.4Mtpa mining operation targeting 70-80ktpa Zn and 20-24Ktpa Cu ✓ Globally competitive costs, strong margins and financials

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PRIESKA: TIMELINE TO DEVELOPMENT

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Complete Prieska Project BFS

• Updated Deep Sulphide Resource and

Scoping Study completed December 2018

• BFS on target for completion in Q2 2019

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Expand and upgrade Prieska Project resource

• In parallel to BFS, Orion progresses key

commercial work streams

• Concentrate marketing; project finance

capacity and optimal structure

Execute exploration program on highly prospective prospecting rights

• Mining Right and Environmental Authorisation

applications submitted in April 2018

• Historical operational data
• Regional exploration ramped up in 2018,
• ngoing in 2019

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CY17 CY18 CY19 CY20

Milestone activities

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Project Approval Q4 Q1 Q2 Q3 Q4 C2021 C2022

Maiden Mineral Resources estimates Mining Right application Mineral Resource upgrade Bankable Feasibility Studies Project construction Ore production

ASX/JSE releases 8 Feb & 9 April 2018 Submitted 6 April 2018 Anticipated Grant of Mining Right ASX/JSE releases 18 Dec 2018

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A DOMINANT LAND-HOLDING IN AN UNDER-EXPLORED BELT

• Highly prospective yet under-explored mineral province
• 22 identified VMS occurrences historically confirmed by

major mining houses

• Reputed to have the highest concentration of zinc
• n the African continent1:
• Large-scale sediment-hosted deposits classified

as Broken Hill, SEDEX and VMS

• >40Mt of contained zinc
• Several known intrusive Ni-Cu-PGE occurrences

with limited modern exploration

• Potential for discovery of high-grade Ni-Cu deposits

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1 Source: Vedanta Capital Markets Day presentation, March 2015

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PIVOTAL BEE TRANSACTION

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Prieska Employee Trust Prieska Community Trust

5% 5%

New BEE Entrepreneurs Prieska Employees Trustco Prieska Community Trustco

Note 1: The BEE Entrepreneurs own 100%

• f the ordinary shares in BEE

HoldCo (Prieska), whilst Orion through

• ne
• f

its subsidiary companies holds a 10% votingright

Current BEE Entrepreneurs

20% 100%1 100% 100% 70%

Note: Mining areas with PR applications pending are identified with spotted shading

Repli: (PR, MR pending) Vardocube (PR, MR pending) Bartotrax (PR) Orion Exploration 5 (PR application pending)

Orion Exploration 1 (PR application pending)

Masiqhame: Kantienpan (PR) Namaqua (MR granted, not yet executed) /Disawell (Two PRs) Orion Exploration 4 (PR application pending) Rich Rewards: Marydale (PR)

Northern projects Prieska projects

BEE HoldCo (Prieska)

Orion

70%

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BEE AND FUND RAISING

Achieving compliance with Mining Charter III Rewarding Current BEE Entrepreneurs for past support Achieving funding

• bjectives for

upcoming projects

• $8.0M share placement announced in April 2019 at a 29% premium
• Placement related to a major value-enhancing restructure of Black Economic

Empowerment (BEE) holdings at the Prieska Project level

• Secured strong technical and financial BEE partners, including local Prieska

community members

• Black South African Investors subscribed for $4M in the Placement, including

$2M subscribed for by investors who have signed an MOU to become BEE partners at the Prieska Project level

• Founding BEE partners to exchange their shares at Prieska Project level for

listed Orion Shares

• New BEE partners to acquire a 20% holding at the Prieska Project level and

fund their proportionate share of Prieska project development costs

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ASX/JSE: ORN

For further information, contact: Orion Minerals Limited Phone: +61 (0)3 8080 7170 Email: info@orionminerals.com.au Website: www.orionminerals.com.au